In the wake of the financial crisis, aggressive easing by developed market central banks unleashed a flood of liquidity and investment money that went flowing towards emerging markets in pursuit of higher yields.
Now rates are rising again in the developed world, and emerging market assets (by they equities, bonds, or currencies) have been getting clubbed.
Morgan Stanley has a big new report on emerging markets, and the risk of the “tide” coming back out, i.e. all that liquidity leaving these markets, leaving them vulnerable.
But who is the most vulnerable?
In this big slide, Morgan Stanley looks at which countries are most exposed to what’s known in the biz as a “Sudden Stop” a severe reversal of investment flows, which can lead to a country losing access to much needed dollars and market access.
In the right column are the main criteria they use to rank countries’ vulnerability.
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